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HHS cancels VaxGen anthrax vaccine contract

Dec 20, 2006 (CIDRAP News)  The US government yesterday canceled its $877.5 million contract with VaxGen Inc. for a new anthrax vaccine, after problems with the vaccine's stability caused the company to miss a deadline for starting a clinical trial.

The contract was the first and largest award under Project BioShield, designed to stimulate the production of medical countermeasures for biological weapons and related threats. The cancellation came the same day President Bush signed new legislation designed to revive the faltering $5.6 billion program.

Because of concerns about the vaccine's stability, the Food and Drug Administration (FDA) refused to allow VaxGen to start a phase 2 trial on Dec 18, as required by the Department of Health and Human Services (HHS), said Marc Wolfson, a spokesman for the HHS Office of Public Health Emergency Preparedness.

Because of the missed deadline, HHS told VaxGen in a letter, "The government is terminating this contract for default."

In a news release yesterday, VaxGen, based in Brisbane, Calif., said it was "actively exploring its strategic and legal alternatives."

The firm has not decided whether to appeal the decision, Lance Ignon, VaxGen's vice president for corporate affairs, told CIDRAP News today. "We find it, I think, regrettable that we were unable to have an open and productive dialogue with HHS about how to ensure all the work that's gone into this could result in an anthrax vaccine," he said.

The contract, awarded in 2004, called for VaxGen to produce 75 million doses of a new anthrax vaccine for the US civilian stockpile, or enough to immunize 25 million people. The hope was that the vaccine would improve on the anthrax vaccine used by the US military, called anthrax vaccine adsorbed (AVA), which was developed in the 1950s.

The VaxGen vaccine is based on a recombinant form of protective antigen (rPA), a key anthrax protein. It was expected to provide immunity in 3 doses, rather than the 6 doses required for AVA, and to cause fewer side effects. Some military personnel have objected to AVA because of reported serious side effects.

The original contract, awarded in November 2004, called for VaxGen to deliver the first 25 million doses in just 2 years, or November 2006, and provided for no payments to the company until delivery. But the company announced last May that the first doses would be delayed at least until late 2007 and probably until 2008. HHS granted the company an extension at that point, but set a Dec 18 deadline for starting phase 2 trials, according to Wolfson.

Then on Nov 3, the company said the FDA had ordered it to postpone the phase 2 trial because of concern that the vaccine would lose potency during the study, clouding the results. That prompted HHS to warn that it might cancel the contract unless VaxGen fixed the problem quickly.

VaxGen officials met with the FDA Dec 13 and presented data on the vaccine's stability, Wolfson said. "The FDA looked at that and said, 'We're sorry, there's not enough here to prove sufficient vaccine stability to lift the hold and allow you to begin phase 2 clinical trials,'" he said.

Because of the missed deadline for starting the trial, "the [HHS] staff and the contracting officer determined the course of action would be to terminate them for default," Wolfson said.

Ignon said the termination didn't come as a complete surprise. "They had certainly given us ample warning that this was a potential outcome."

He indicated that the stability problem has not yet been solved. "It's clear that more work needs to be done on the stability issue, but that's not an uncommon challenge to face in vaccine development," he said.

Wolfson said HHS is "still committed to a next-generation anthrax vaccine," but no decisions have been made about next steps. "I'd expect that early next year there'll be an announcement from the department," he said.

He noted that the National Institutes of Health has been supporting anthrax vaccine research by Avecia, based in Manchester, England.

Meanwhile, HHS has been stockpiling the older anthrax vaccine, now made by Emergent BioSolutions, Gaithersburg, Md. The agency ordered 5 million doses in May 2005 and exercised an option for another 5 million in May 2006. "Thus far we have just over 8 million doses that have been delivered to the stockpile," Wolfson said.

Project Bioshield was intended to promote the development of medical defenses against biological, chemical, and radiological weapons by guaranteeing that the government would buy promising products, which otherwise would be unlikely to find a market. But major pharmaceutical companies have shown little interest in pursuing BioShield contracts, leaving the field mostly to small companies like VaxGen.

On Dec 9, Congress passed legislation designed to strengthen the BioShield program and improve public health preparedness in other ways. The bill, signed by President Bush yesterday, sets up a Biomedical Advanced Research and Development Authority within HHS. The agency will be empowered to pay contractors when they achieve certain development milestones, instead of requiring them to deliver a finished product before getting any money.

Ignon said VaxGen is not stopping all work on the vaccine immediately, but "there will clearly be a significant diminution of our efforts."

The company also makes a smallpox vaccine but has no contract for it. The firm has a "state-of-the-art manufacturing facility," Ignon said. "And we are reasonably well capitalized. We do have options."